Posts Tagged ‘Google’

Deloitte has produced some great research into the UK TV market to coincide with the Edinburgh International TV Festival.

The study, entitled ‘Perspectives on Television in Words and Numbers’, is full of all sorts of stats about video-on-demand uptake, product placement and other TV goodies. But one statistic in particular caught my eye. Deloitte makes the point that television as an industry remains far far more effective at converting users into revenues. The report, which is based on UK data, states: “It takes 93 days to generate a pound of advertising revenue per Facebook user; this compares to 11 days for an ITV viewer [ITV is the UK’s leading commercial broadcaster]. Social network’s CPMs are estimated at between 30 and 40 pence, far lower than the average for television. YouTube’s CPM has been estimated at 72 pence.”

It’s not exactly comparing apples with apples (a Facebook user is not the equivalent of a TV viewer), but it’s an interesting point. Facebook may be making money, and its revenues may be growing quickly, but it’s still pretty ineffective at turning users into dollars.

A further illustration of this is in the Deloitte endnotes. ITV, a UK-only broadcaster that has had a torrid few years, pulled in £987 million (around $1.5 billion) of revenue in the year to 30 June 2010. Facebook, which has upwards of 500 million users around the world, is forecast to make $1 billion in the more optimistic forecasts.

Of course, it’s worth remembering that Google’s rise was driven as much by SMEs and direct-response advertisers as by big brand advertisers. It created a whole new direct-response channel.

Interestingly, there are social media companies out there already making large sums of money. China’s Tencent, owner of the QQ platform, is one of them – its revenues easily eclipse those of Facebook despite being a single-market operator. Tencent’s growth, however, has owed little to advertising. Online ad revenues make up less than 10% of its turnover. The bulk of its revenue comes from ‘internet value-added services’, mostly online gaming. It makes money, in other words, from its users.

Bit of a disappointment really. I was at least expecting some form of tiered charging system, a la the Financial Times. But on a global level, a micropayments system, similar to the ones used in online gaming, does seem to have traction.

Can it work? I asked that months ago on my old Media blog. And frankly, we’re no nearer any answers. It seems crazy to think that people will pay £1 to read a news story they can read anywhere else for free. The BBC is still out there, of course, and even if it goes through with plans to scale back its online content, there is still the Guardian, which has pledged itself to a free-access future. The Times is really going to have to show it can deliver value-add content, or rely on a very loyal minority. And let’s face it, Murdoch’s online track record isn’t exactly sparkling.

Still, the sums involved are pretty substantial, according to the Guardian:

Assuming that only 5% of daily users convert to the paywall system – a standard metric for paywalls – that would bring in £1.83m if they each buy a £1 daily pass. At a 10% conversion, it would net £3.66m per month for the two papers. If more people of those choose to buy the weekly pass, the revenues would be lower.

The big question now is what to do about Google. We all know that if you paste a headline into Google you can bypass a paywall – just try it with the Wall Street Journal. Should The Times block Google and protect its paywall but hurt search traffic? Or should it be like the WSJ and just pretend nobody knows about that?

There’s been a lot of sabre-rattling toward Google from NewsCorp, suggesting it might seriously pull back from Google. Instinctively that feels like a mistake, and something that could seriously set The Times back years. From personal experience I know that news sites get more than half their traffic via search. What’s more, The Times seems to be looking for one-off payments rather than tying people in to annual subscriptions. That approach will require regular traffic through the site.

One thing’s for sure, though. If Murdoch starts making money from this, there will be a lot of others following him. And the more of them that do so, the less free competition there will be for The Times.

Here’s a fascinating post from the Nieman Journalism Lab (h/t to Youku’s @kaiserkuo for digging it out). It’s a write-up of a study into the way news is reported then reprocessed in the modern, connected media. The study took one story (the tracing of the China hacking attack on Google to a couple of schools) and analysed the way the information appeared then spread among the news media. It used Google News to identify 121 unique stories in publications of various sorts (Google News discounts articles that simply reproduce text).

Among its findings were that of the 121 stories, just seven were primarily based on original reporting, and only another 13 included some amount of original reporting. The rest were rehashes, largely of the original New York Times piece.

Does this matter? The write-up is a little ‘o tempora, o mores‘, lamenting the decline of modern journalism. That seems to me a very US attitude. In the UK, where we have much lower expectations of our newspapers, we’ve known that many of our media sources are not always bravely forging their own paths but are quite happy rehashing whatever is already in the public domain.

However, it is depressing that so much of the news we read is simply rehashed, not just by blogs but by ‘proper’ publications. What if a piece is incorrect? How far round the world can it get before anyone notices? And from a PR point of view, how do you repair the damage once untrustworthy information is ‘out there’?

And it’s also depressing that the best examples of journalism appear still to be the places they’ve always been – the seven news sources that actually went out and got their own take on the story were The New York Times, The Washington Post, the Wall Street Journal, The Guardian, Tech News World, Bloomberg, Xinhua and the Global Times. Excluding the two from China, which might be expected to do their own reporting, it’s four newspapers, a news wire and a specialist site. Maybe that’s not surprising, but given the financial pressure newspapers are all under it raises a worrying question: if the crisis in the media world continues to hit their reporting, where in God’s name is the news actually going to come from, aside from press releases?

All things being equal, a shrinking media sector would see the rehashers go to the wall and the ‘proper’ journalists shine. But when were things ever equal?